Crossing the Threshold of the Long 21st Century

Before We Begin…

The rough draft for the decade from 2025 to 2035 ballooned to almost 6,000 words, so I concluded I would need to scrap my initial plan to tell the story of the coming century by the decade. Instead, each Friday will cover a five-year period, starting in 2025 and ending in 2125. On top of changing the chronology of the storytelling, I realized I had a second issue on my hands. I could tell the story of the coming century solely through a dry, textbook style, outlining momentous events and tracking broad trends. But to really tell that story, we need characters to follow. People who’s lives can give the imagination something more concrete to grip on to as the wild beast of history careens from one landmark event to another. So I've decided to take a page, and four characters, from the book that Dr. Mattson and I are finishing. At the start of Inequality by Design, we meet three high school graduates of the class of 1980, and follow them for 40 years, as their lives are buffeted by the corporate-approved creative destruction of the neo-liberal economic era. By the end of the opening chapter, as the main characters enter elderhood, their kids and grandkid are entering adulthood in the year 2020. So it is these four who we will follow through the first half of the unfolding Long 21st Century.

What better metaphor for the coming century, than a gate topped with barbed wire, dwarfed by an approaching storm?

Also, Oklahoma's wild weather generated this image, not AI. More on that later...

The rough draft for the decade from 2025 to 2035 ballooned to over 6,000 words, so I concluded I would need to scrap my initial plan to tell the story of the coming century by the decade. Instead, each Friday will cover a five-year period, starting in 2025 and ending in 2125. On top of changing the chronology of the storytelling, I realized I had a second issue on my hands. I could tell the story of the coming century solely through a dry, textbook style, outlining momentous events and tracking broad trends. But to really tell that story, we need characters to follow. People whose lives can give the imagination something more concrete to grip on to as the wild beast of history careens from one landmark event to another. So I've decided to take a page, and four characters, from the book that Dr. Mattson and I are finishing. At the start of Inequality by Design we meet three high school graduates of the class of 1980, and follow them for 40 years, as their lives are buffeted by the corporate-approved creative destruction of the neo-liberal economic era. By the end of the opening chapter, as the main characters enter elderhood, their kids and grandkid are entering adulthood in the year 2020. So it is these four who we will follow through the first half of the unfolding century.

A fine read, even if it was
as much a way to talk about
the USA in the 60s and 70s,
as a detailed examination
of the Long 14th Century.

    But before we meet our protagonists, I want to throw out a quick note about the title of this post. Calling an era a 'long century' is, like everything else under the sun, not new. Perhaps the most well-know example come from Barbara Tuchman's book A Distant Mirror: the Calamitous Fourteenth Century. Published in 1978, the book covers the events of the Great Famines of the early 14th century, the Black Plague, the Papal Schism, peasant revolts, and the general breakdown of Western European society as it transitions from the Medieval Period (roughly 800-1300 AD) to the Early Modern Period which began sometime around 1453 with the conquest of Constantinople, the flowering of the Italian Renaissance, and the start of the Age of Sail. Setting aside the academic criticisms, the concept that Tuchman spoke to was the idea that the events which defined a period of transition didn't conform to the neat limit of 100 years. Thus, the changes experienced by Western Culture which were amplified by the beginning of the Little Ice Age, fundamentally reformed what it meant to be a member of Western Christendom. And that era ran for nearly 150 years, aka a century and a half. A long century, if you will. And that period seems suspiciously similar in length to the philosophy underpinning the Iroquois Confederacy's Great Law of Peace, a philosophy that one should consider the impact of their actions on the next seven generations. Arabic thinker and historian Ibn Khaldun's Dynastic Change and Its Economic Consequences posits a similar length of time as the life cycle of any given dynasty.

    This is all to say that I believe we, the people of North America, have already crossed the threshold. While I don't know what event future historians will point to as 'the' triggering event: September 11th, the Great Recession, Calderon's War on the Cartels? Heck, they may even reach back to the first iteration of NAFTA, which went into effect in 1994 and ushered in a transformation of the North American economy from three big, separate entities, into functionally one, tightly interlinked mega-economy. Indeed, if the Long 21st Century began in 1994, and runs until some seminal event circa 2125, that would bracket the Long 21st Century quite nicely. 

For giggles, I played with AI image generation for the four main characters. This was a for-fun experiment and I will return to stock images. But let us return to the four characters of the narrative, shall we?

    The first is Marty Junior, first-born son, unsurprisingly, of Marty Senior. Growing up, Marty took his role as big brother seriously enough he had a few run-ins with the law, beating up anyone he perceived as picking on his little brother or sister. By 2025, Marty Junior is a 33 year old cyber security specialist who works for the State of Michigan. He lives in a suburb of Detroit, Michigan with a wife, Tina, and their (uncreatively-named) newborn son, Marty the third, aka Trey. 

    Little sister Jillian celebrates her 30th birthday in 2025. Her parents secretly joked that she got all the brains of the family. Those brains won her free rides to the University of Michigan and that to a Canadian medical school. A few years out of residency, she and her husband Chris run a health clinic in Ashtabula, Ohio, which operates at perpetual near-bankruptcy. Jillian is pregnant with the couple’s first child. 

    Our third character is the younger brother, 26 year old Bobby, who lives in Louisville, Kentucky. Like his father, Bobby suffers from dyslexia, which has made him a perennial temp-worker. He is a bit of a black sheep of the family, as their overworked father’s deteriorating health over the course of the 2010s left Bobby without a stable father figure. Bobby showed up quite drunk at the father’s 2020 funeral, and hasn’t spoken to Marty Junior or Jillian since then. 

    Apart from these three siblings we have 16 year old Allison, the granddaughter of Jenny, another protagonist from the first chapter of Inequality by Design. In 2020, her family left the rustbelt for the warmer climate of the Gulf Coast, but their 30 year old car only got them as far as western Tennessee before breaking down for good. In 2025, Allison is slogging through what passes for an education at a chronically underfunded high school. Unlike her mother at the same age, she is not boy-crazy. Having spent her entire childhood moving from one apartment to the next, always one step ahead of eviction, she never established close friendships, and was never quite able to pin down what she wants to do with her life. 

The Big Picture: 2025 to 2030

Is that a sunrise or a sunset?

The first few of the years are deceptively calm for both the United States, and our four main characters. International headlines periodically mention a devastating drought pushing the people of the Yucatan towards starvation. A dramatic series of financial and political crises across the northern border in Canada disrupts some cross-border trade, but most people in the U.S. are just trying to get by. Making basic ‘getting by’ harder, import tariffs cost every American roughly $2,600 each year, but US-manufactured goods to replace more expensive imports often fail to materialize. At the same time, attempts at mass deportation pursued by the Reactionary Party administration in Washington pushes more and more recent immigrants and native-born relatives into a shadow economy rife with exploitation and criminal elements. While events in the eastern hemisphere make trouble over there, North America appears a serene island of stability by comparison. But pressures in all three major countries are building. 

I don't know what this chart measures, but 
it certainly looks bad for Canada...

Three horsemen of the economic apocalypse visit Canada: first comes electoral chaos, with no obvious replacement for the Trudeau government, followed by the collapse of an inflated real estate market and declining exports to the US. These factors spark a government debt crisis. The western provinces demand grater financial accountability from Ottawa, and hold referendums to refusing to send tax monies on to the federal government. Like the independence referendum in Catalonia, the government responds with arrests and laws banning provinces from holding plebiscites. This goads Quebec into outdoing the western provinces, with the provincial parliament votes to formally ‘confederate’ with the rest of the country. The province will no longer enforce laws passed by the national parliament, and will explore creating their own currency. The move is meant to force the Canadian government to backtrack on banning plebiscites, but instead provokes the national government to send in the Mounties and dissolve Quebec's National Assembly. But the move backfires, and the western provincial parliaments side with Quebec, passing laws to explicitly ban local businesses from collecting federal taxes.  By 2028, the country is divided into two hostile camps, the confederates of the periphery, and the centralizer provinces in between. 

Mexico's drought monitor readings last year.
Yes, I know, the Yucatan looks okay for now.

If Canada suffers from a deluge of problems, to the south a lack of deluges causes a different set of problems. The failure of cool-season monsoons leads to crop failures across southern Mexico and Central America. Starvation pushes some five million desperate people to crime and lawlessness, a situation local criminal gangs are only too happy to exploit. While the government in Mexico City does attempt to ship gran to the region, most of the shipments end up looted by the starving or stolen and held for ransom by gangs. The Maya-speaking peoples of the region view the fight between the Spanish-speaking gangs and government forces as just another instance of second-class citizenship and historical brutality. The Maya break into outright rebellion, and they are quickly dubbed the Zapatistas Nuevas by the Spanish-speaking population. This Pan-Maya movement even appeals to Spanish speakers sick of being held at arm’s length by the central government in Mexico City and being forced to take in people deported from the United States. 

As the year 2028 begins, the United States appears insulated from the brushfires burning to the north and south. But that appearance is deceiving, and the US is just a much a tinderbox of economic and cultural resentments. Every conflagration requires a spark, and because history has a sense of humor, an income tax cut proves to be that spark. A law passed in 2026, supported by both political parties, goes into effect. It eliminates the higher tax rate on overtime, while simultaneously ending the requirement that employers pay overtime for any work past 40 hours a week. Most work-forces without a union contract, and even some with one, quickly find their OT disappearing from their paychecks in January. 82 million Americans work hourly-wage jobs, and many salaried employees also receive some form of overtime compensation, so the consternation and fury spreads quickly. 

If your start a republic by protesting taxation, why not end one protesting taxes?

Still believing the political process might solve the problem, Americans flood congressional offices with angry calls. But Congress fails to repeal of this despised reform, with some even responding to constituents to get different jobs. Since the right to strike was also eliminated early on in the reactionary administration, labor unions and non-unionized workers must turn to a more informal method of protest. They call for everyone in America to take a walk in the park on April Fool’s Day, and stay there until tax day on April 15th. Municipal parks across the USA fill with millions of people. The media sends the message that this April Fools joke will be a one-time event, but the next day, the parks fill up again. Then the next day. Then the next. A week into the General Strike, some 30% of the US labor force takes “walks in the park” rather than going to work. Many who do not call off work participate in slow downs and stoppages, vowing to do half the work expected. The strikes prove surprisingly successful, grinding the economy to a halt. 

The oligarchs hold the cards though, and tell every elected official in the country if they ever want to see a single cent in campaign contributions again, they will break the strikes. The majority of elected officials comply with their corporate task-masters. National Guard units are mobilized, and police officers called in for extra pay working on “park clearing” details. In some cases, local cops and national guardsmen refuse to comply with the orders. When this happens, private security companies fill in support roles, freeing up those who do obey orders to put on riot gear. 

It is NOT hard to find a real-life image of cops 
clearing protestors out of a park. Your challenge,
dear reader, is to guess which park clearing this
is a picture of...

At this point, our four characters re-enter the narrative, and we will follow them through the General Strike of 2028. So, let’s make this all personal…

Marty Junior

Marty Junior counts himself as one of the good guys. Working for the State of Michigan’s eponymously-named Office of Remote Surveillance, Marty monitors the online activity, especially financial transactions, of organized crime with a focus on human trafficking. Starting in 2025, the state received federal money and expanded definition of human trafficking, including labor organizers and charitable NGOs accused of harboring illegal immigrants or naturalized citizens targeted for deportation. Marty finds the expanded definition troubling, but a round of automation and job cuts puts to rest any doubts he may have. Junior even gets a promotion to shift supervisor, which largely insulates him from the job cuts. Plus, his superior assures him that ‘loyal men’ will be needed in the near future, rather than increased automation.

When the general strike begins Marty and his agency are more than willing to backstop National Guard and private security forces with communications and intelligence. They monitors both live feed cameras and cell phone traffic of the park walkers, turning the information suspected organizers of the strike over to local police agencies. Arrests take place overnight at suspects residences, before they can get to the protection of crowds at local parks. Marty goes home every day after work and loses no sleep about the possible fates of these political prisoners.

        In the years following the crackdown on the General Strike, Marty Junior boasts to his superiors about the vigor with which his office tracked down cell traffic and cash app transactions. He concludes the late-night arrests prevented the Detroit-area protests from getting out of hand. When speaking to people outside the office, Marty rarely mentions his work, and often draws on his experiences before the strike, if the other person asks anything like probing questions. Even with Tina, he rarely talks about the core of his work.

Like this, but with corporate sponsorship...

Jillian

Julie and her husband Chris thought they would be a power-couple; she would be the doctor providing care, while Chris the accountant would make sure they get paid. They even identified Ashtabula, Ohio as a community underserved by the health care system, thinking this would provide a stable customer base. But the joke was on them, as insurance payouts declined and patients found themselves unable to afford copays. To keep their clinic open, the pair find themselves having to hire additional staff to collect payments and manage paperwork, rather than provide direct patient care. 

While Jillian, Chris, and the fifteen clinic employees sympathize with the striker’s, they know they cannot take time off to join the strike, as the clinic would certainly lose too much revenue. The staff of the clinic demands some sort of solidarity, and a vote is taken to is taken to open the clinic to them anyone ‘walking the nearby park’ without up-front payment required. The Ohio governor declares a statewide curfew, and the State Police show up to close the clinic. Jillian and the staff leave, but show up the next day to operate as normal. Much like in Michigan, the state authorities in Ohio regard such actions as trouble making. Since he manages the clinic, state police arrest Julian's husband Chris while he is on his way back to a local park to spread word about the services the clinic might provide. This move infuriates both Jillian and the members of the staff who then vote to take half of their staff to the park to help treat any injured strikers. While Jillian stays to oversee clinic operations, half of the staff is present when the local park is surrounded by mounted riot police and the National Guard. 

Eventually, the tools of empire used abroad,
end up getting used on the people of the homeland.

When the protesters refuse to disperse, the state attacks. Hundreds, including the entirety of the staff are either injured or arrested very few escape the police cordon. The crackdown results in several deaths a number of critical injuries, and sparks general outrage across the state. The next day when protesters meet at the parks, they come heavily armed. In some places this results in tents standoffs with the police but in others, including Dayton and Toledo the strikers shoot first. Dozens are killed and hundreds injured across the state. Those currently in custody are beaten and tortured on suspicion that they are somehow coordinating the spontaneous riots on the outside. The victims of this state brutality include Juliana's husband Chris, who staggers out of the prison with broken shoulders and black eyes.

Bobby

As mentioned earlier Bobby works a series of temp jobs in Louisville Kentucky. Needing every dollar he earns, he does not participate in the first day of the general strike, referring to the people by the media moniker of April fools. As the strike enters its second week, Bobby loses his temper job unloading trucks at the Louisville train station.Most of the freight trains in the country are either halted or operating way way behind schedule. While Bobby is initially frustrated with the strike, an idle railway worker encourages him to go to one of the local parks and actually meet the people he's upset with. Bobby follows the advice and ends up befriending several strikers. With temp jobs dried up and rent due on the 15th, Bobby sews what’s left of his cash into his windbreaker, grabs his sleeping bag, and heads to the park. There, he joins hundreds of others on the path to homelessness. 

As word of the riots in Ohio filters down to Kentucky guns, improvised explosive devices, and Molotov cocktails begin showing up ay discrete locations around the park. Bobby is highly suspicious that at least some of these have been placed by agents of the state, and he and a friend actually detain someone leaving a crate of national guard issued hand grenades. 

Go south, young man!

When Bobby receives a phone call from his mother begging him not to participate in the strikes he tries to do the right thing and turn the hand grenades over to a police officer. This move predictably backfires, with Bobby arrested for possessing stolen government property. Fortunately for him, he's sitting in county jail when the crackdown begins in Louisville. The park he had been at is the scene of some of the worst fighting. Over 300 people, both strikers and security forces, losing their lives. Bobby is further fortunate that the governor of Kentucky is much more soft in his support of the corporate state and very quickly offers an amnesty to everyone arrested during the rioting if it will get the bloodshed to stop. This tactic, along with the collective horror due to the Battle of Louisville, brings the general strike to a slow-motion. Finding an eviction notice on his door, Bobby grabs his sleeping bag and jumps on an empty freight train. As the train rumbles south, Bobby calls his mom and lets her know he's leaving Kentucky.

Allison

I mentioned above Alison found everything about school boring: classes, teachers, fellow students, all of it. So she dropped out and started working full-time at a fried chicken place. At the beginning of 2028 Alison is 19 years old working as a shift manager. As the strike begins the fried chicken places teeters on the verge of bankruptcy because the franchise owner keeps demanding more and more profit from the business. The owner even visits the restaurant the day after the general strike begins, and threatens to fire anyone who participates going forward. To show he’s serious, the owner fires two line cooks who called out the day before. This action completely backfires. The entire staff walks out and heads straight to the nearest park. They make impromptu meals for fellow strikers and generally serve as a nucleus to organize everything people living in the park might need from food to clothing to shelter to sanitation facilities. Well this would mark Allison out as an organizer and someone targeted for arrest, the entire operation is done with sticky notes, pencils and absolutely no electronics. 

Allison throws herself into the organization of the strike camp with enthusiasm, finding a meaning that she never found in the mindless rigidity and conformism of high school. Allison and the other strikers are fortunate that the mayor of Memphis is one of few elected politicians in the state of Tennessee to not tow the corporate line. The Mayor argues quite publicly that the police department has better things to do than kick people out of parks that are technically owned by the public which currently is filling them up. This buys the strikers an few extra weeks until the Tennessee National Guard moves in to clear out the protest camps in early May. The Tennessee state government then dissolves the city government of Memphis, turning all its functions over to the county and declares that anyone found in the parks after the middle of the month will be arrested and charged with domestic terrorism. 

Allison and her work crew stolidly return to the restaurant. Their boss agrees to rehire them, on the condition that they pay back the franchise potential profits lost during the strike. This move has the double effect both garnishing meager wages while simultaneously showing the employees just how much profit they provide the franchise owner. The workers in public agree to this, but hold a secret meeting and decide to assassinate the franchise owner. The restaurant’s bartender has military experience and improvises an IED from household items. A week later, the franchise owner’s car blows up shortly after leaving the restaurant. Everyone in the restaurant is suspected of participating, but they all keep quiet and the police can never actually pin it on anyone. From the silence surrounding the bombing of the boss's car, emerges an unspoken consensus; "We could do that again."

"I don't know what happened, we were busy at working..."

Wealth, Income and the Deluge

I wonder why the water is colored brown?

This week I plan to take us from the stratospheric themes of planet-wide ecological catastrophe, to an issue that arises from time to time in human societies: wealth and income inequality. Did I mention that Dr. Ryan Mattson and I have a book in the works on the topic? We do, and it’s set to be published by Upriver Press in the Spring of 2025. It will be available through online retailers, as well as local bookstores. If you choose to pick it up, please use the latter. If you must buy online, please avoid buying from the behemoth. Jeff Bezos has enough money already. And that’s a nice segway back to the topic at hand.

When speaking of wealth and income inequality, some commentators fall into the trap of using the terms interchangeably. This is understandable for most Americans, because most Americans have almost no monetary wealth, so income inequality feels like the only measure that might matter. That said, they're not, strictly speaking, the same thing. Income is, of course, the amount of money or goods or services that a person can draw upon over a given time interval. Do you get paid weekly? Maybe that’s your benchmark for income. Yearly? I hope you can make that paycheck stretch. Wealth, on the other hand, includes both real goods, and all the various tokens and balance sheets we’ve created to keep track of resources owed to a person by the wider society. For that really is what wealth is; not so much a tally of dollars and cents, but a way to designate who in a society gets to control resource flows.

Now, there are computational tricks with which people can employ to make statistics say just about anything, with very little need for outright falsification. My favorite example is ‘adjusted gross income’ which means that, when looking at income, one must include all forms of income, not just hourly wages or salary. This includes the cost of health insurance, as well as Social Security, Medicare and Medicaid benefits. This number intentionally inflates the income of lower percentile people, in a bid to show that income inequality isn’t really that bad. By using this one, simple trick, you can make it look like the bottom 50% of Americans aren't really that bad off, since they bring home almost 10% of national annual income. Take a moment to consider that; roughly 165 million Americans earn half of what the top 1%, that is, 3.3 million, earn in a year. It’s not the own the status-quo lovers think it is, especially considering that most of that health care insurance doesn’t really cover all the expenses of going to the doctor.

Maybe if the bottom 50% wasn't so damn poor,
they would pay more in Federal taxes.

All that said, by any metric, income and wealth inequality in the United States is already historically high. By some measures, wealth and income inequality rivals other historical examples like pre-revolutionary France, or medieval Europe before the black death. But while historical records are spotty at best, and much of that scholarship relies on equating the yearly cut a lord took of a peasants harvest with modern wage slavery, it's worth noting that the RAND corporation, which is not exactly known as a leftist think-tank, published a paper putting the wealth transfer from the bottom 99% of Americans to the top 1 % at $50 trillion since 1978. That’s ‘trillion,’ with a T, dollars, over the last 40 years. My good friend Dr. Mattosn thinks that number is probably larger, because the impact of wealth inequality compounds over time. Thus, a dollar taken from a person’s wages in 1995 and fed to the shareholders, translates into a much larger wealth transfer today, because that extra dollar could have paid debts or been put into savings by the earner 30 years ago, rather than sitting on the balance sheets of some 1%’ers accountant. Speaking of the 1%, let’s look at one of the chief methods used by the ultra-rich to keep their wealth at the top. Let’s talk about capital gains taxes.  

That old sayin' them that's got are them that gets
Is somethin' I can't see
If ya gotta have somethin'
Before you can get somethin'
How do ya get your first is still a mystery to me

- Ray Charles "Them That Got"

Just for clarity’s sake, let’s define a capital gain. When one makes money from the sale of an asset or investment, it is referred to as capital gains. Put another way, you made an investment of capital (aka money) in an asset. If you sell it at a profit, that extra money is the ‘gain.’ and the person is not taxed on the money they invested, but rather on the money made off this investment. 

Put another way, if you spent fifty dollars on a rare collectible you found at a thrift store, then turned around and sold said oddity for one hundred dollars, you would have gained fifty bucks on a capital investment of fifty bucks. As long as you earn less than $47k as a single taxpayer, or $94k for a couple filing jointly, the fifty bucks you made would not be subject to taxation as a capital gain. If you made more than that, you’d technically be liable to pay a 15% tax on the profit. But your secret is safe with me.

In fiscal year 2020, Americans reported $8.4 trillion in salaries and wages to the IRS, and $1.1 trillion in capital gains. According to the Tax Policy Center, the richest 1% of Americans, made about 79% of all capital gains in 2019, and the richest 0.1% bringing in half of that $1.1 trillion in income. Put another way, the top 0.1% of American taxpayers, or about 120,000 households, made about $600 billion in capital gains in 2019. For comparison, the poorest 1/5th of American households, totaling about 66 million people, earned about $252 billion from salaries and wages in 2022, according to the US Census Bureau. Take a moment to re-read those stats. 66 million Americans brought home less than half of what the richest 330,000 made in capital gains, in just one year.

But wait, there’s more. There’s always more, isn’t there? You may have missed it up there in the description of what constitutes capital gains, but capital gains are taxed at between 15-20%, depending on how much you made (and how uncreative your accountant is). The top rate paid by those making more than $626,000 filing singly is 37%. The lesson I take away from this simple breakdown of the tax code is make money so your money can make you money, and whatever you do, don’t earn a wage or salary. Of course, how you get the money, to invest the money, to make more of it, well, proponents of our current economic system never really talk about that. At least Ray Charles did.

Let’s take a quick look at another method by which those who already have the money, make more of it: stock buybacks. 

First off, what are they? Simply put, stock buybacks are a financial mechanism by which a company which issued stocks, buys them back from investors. This practice doesn’t seem so bad. After all, people buy and sell stocks all the time. Which is true, but they sell stocks to each other, rather than back to the company, and this is a key distinction.

 

Second, we would be remiss not to point out that these buybacks were illegal until the 1980s. The stock buyback quickly became a staple method for concentrating wealth and control in the fewest hands possible, almost entirely in the finance and investment community. 

How is this done? Stock buybacks have a pernicious, two-fold effect. One - they almost always come at the expense of retail, small scale, investors, rather than at the expense of institutional investors like big money Chads. In effect, they concentrate control of companies in the hands of the investor class, who already have disproportionate control of them. But that’s not the only effect, because stock buybacks also serve to drive up stock prices. After all, the stock is in demand, but the supply is going down, so the price goes up. This means, if the institutional investors then choose to turn round and sell their stocks at a later date, they will almost certainly fetch higher prices, thus making the institutional investors richer. 

Not only does this drive income and wealth inequality, but it has a third effect: money used in buybacks cannot be spent on reinvestment in the company. No hiring new workers, no higher wages and salaries, no capital investment in new equipment, no expansion of the business. This is no small point and should be reiterated. When that money leaves the company in the form of a stock buyback, the board or managers of the firm can then plausibly, if more than a little dishonestly, say that extra money to hire more staff, pay existing staff more, or invest in newer and better machinery or training programs, simply isn’t there.

Don't confuse a buyback with a stock paying dividends.
Uncle Moneybags certainly wouldn't.

Take, for instance, the recent case of the General Motors stock buyback. The company announce, right after concluding a deal with the United Auto Workers union, that it would immediately buy back $6.8 billion of its common stock, with further buyback of about $4 billion planned for 2024. It’s worth noting too, that GM has not spent much money buying back stocks before 2023, with the values for previous quarters counted in the low millions of dollars. And spokespeople for the company explicitly stated the buybacks were aimed squarely at offsetting the costs of the new UAW deal, and to reassure Wall Street the company was a safe investment.  Further, GM did not announce it would hold those repurchased stocks in the hopes of selling them at a later date for a higher price, but that it planned to retired the stocks. This will concentrate the holding of stocks by institutional investors and wealthy individuals.

Indeed, insiders, that is, members of its board of directors, executives and senior officers, hold nearly 7% of GM stock, with 47% held by institutional investors, and a the remaining 45% held by publicly traded companies and individual investors. These numbers alone represent a great disparity of ownership in favor of capital, but the disparity becomes even more apparent when one considers that roughly 84% of GM stocks are owned by institutions, and only 16% by the general public. To use these numbers as a rough guide, the company will fork over $9 billion to institutional investors, and about $ 1.7 billion to the general public. And wealthy individual investors dominate the category ‘general public.’ This brief examination isn’t meant to single out GM as a uniquely bad actor, but rather to illustrate the way the wealthy concentrate not just cash and assets, but control of publicly traded companies. 

But the United States is not all of North America, and as noted earlier, Canada and Mexico have lower GINI coefficients than the USA, so surely that means the rest of North America will be okay. Right? As the saying went in the 19th century, when France sneezed, all of Europe caught a cold. For context, given the regularity with which France threw a revolution (1789, 1830, 1848, 1870), the impacts of those revolutions mattered a great deal to the rulers of the rest of Europe. After all, if the French are running around talking about liberty and equality and fraternity, it might encourage some of your more uppity subjects to think they need in on some of those liberal, Enlightenment values.

You know you came here for the nudity!

 So I think when the United States has its revolutionary moment, and I believe the United States will, within my lifetime, the rest of North America is going to catch a cold. To stick with economic impacts alone, US-Mexico trade was valued last year at $855 billion, giver or take a few million. The value of US-Canada trade was actually a bit greater, at $905 billion last year. So even if the governments of the other two big North American countries could somehow seal off their nations from the US, the economic impacts of a trade disruption caused by a revolution or civil war or full-scale break up, would be immense for both Canada and Mexico.  This outcome shouldn't come as a shock to anyone. The implosion of governmental structures and political economies in one country inevitably affect the countries around them. 

Before we talk about guillotines, tumbrels and revolutionary chaos, we should at least mention what might be done to avoid the more violent outcomes linked to economic inequality. I plan to touch on that next week ***spoiler alert*** but for now, there are some political solutions economic inequality in the United States that don’t have to involve severed heads and mob violence.

Tumbril, guillotine, revolutionary chaos!
This painting has it all!!

A fairly straightforward right-of-center solution to income inequality would be an enforcement of anti-trust laws. If the federal government were to get its act together and break up all of the gigantic firms that dominate American economic life, we might see a genuine trickling down of wealth to the working classes that create that wealth. I think it's worth noting that in almost all sectors of the American economy, from finance to agriculture, to manufacturing, to media a scant few firms functionally control their respective markets. The biggest, most obvious example is Amazon, which controls somewhere around 40% of U.S. e-commerce.

But there are also less obvious oligarchies or near monopolies, think of the car industry. We used to have a literally a dozen big car makers, until they were bought out by the big three, which is now functionally a big two. Or think of the banking sector in the way in which so many large banks have been bought out by each other in the wake of the 2008 .Financial crisis and the current brewing financial crisis of smaller midsize banks failing along with the commercial real estate market teetering on the brink of failure. 

Or consider agribusiness. We have four or five firms, depending on which specific field of agriculture you're looking at, which control 80% of agricultural production in the United States. We could go down a whole laundry list of the ways in which the economic well-being of Americans are controlled by people that live in many cases hundreds or thousands of miles away. 

But the United States did not always work like this. It has literally been in my lifetime, in the last 40 years, that economic power in corporate consolidation has moved so quickly and aggressively to put the economic reigns of the country in as few hands as possible. That only does this make markets less competitive, it also disincentivizes the ownership class from sharing any of the profits or wealth with the people who work for them because they are so distant and disconnected from their very own workforces.

There are a handful of what might be deemed centrist solutions are these typically are the neo liberal grab bag of slightly higher marginal taxes maybe a little more social spending over here or over there they don't really tackle the core of the problem but might be enough maybe to head off truly revolutionary fervor.

And then there are the left of center solutions these include things like universal basic income out now expropriation or my personal favorite solution turning ownership of private industry over to the workers that actually work in those businesses. Without going into too much detail about what each solution might look like in terms of real policy I've been told that universal basic income as viable as long as the Federal Reserve agrees to go along with it. Similarly state ownership and expropriation of large businesses and industries can be done without going for communist. Nationalizing of industries to break up large firms would be similar to the anti-trust solution mentioned earlier but might go further or have more further reaching consequences in terms of permanent downward redistribution of wealth.

As a pragmatist myself I think that and all of the above approach would be ideal from a policy perspective both Bret breaking up large businesses through anti-trust laws and turning over the ownership of those businesses to the employees of the businesses would ideally create a healthy free market well at the same time resulting in the real redistribution of wealth and ownership to the people networking those businesses. But I don't think most of you reading this came here to read about Ben Johnson's ideal policy solutions to an incredibly complex topic.

So let's get on to what this implies about the future of North America. Insured as mentioned earlier what happens in the United States will spill over in affect the other countries in North America and there's nothing either side can really do about it. While it might be tempting for Canadians to say oh we can sell our manufactured goods and oil to other countries, or perhaps for Mexico to say “OK, we will become the middle manufacturer for some other advanced economy like Japan or Western Europe,” that's simply not how I think history will play out. Due both to the geographic proximity, and to the degree that international trade has bound Mexico, Canada and the United States to each other. And when the United States experiences its revolutionary crisis the other two countries will be affected, probably to a greater extent that they anticipate. 

Nothing screams "FREEEEEEDOMMM!"
quite like being an armed enforcer for the State.
But I'm sure they'll respect your civil liberties...

There are a number of events, driven by economic inequality, which could cascade into outright revolution here in the US. The most obvious would be some sort of financial crisis, likely driven by defaults as fewer and fewer people and businesses can service their debts as ever more money gets hoovered up by the top income bracket. This would look a lot like the 2008 financial crisis, which quickly transforms into wider demands, not just that policy makers address the immediate crises, but the underlying causes. There are other scenarios that could result in a revolutionary moment: some proxy war spirals out of control and disrupts global shipping could cause a finance-heavy economy like the US to experience a sharp economic contraction, or we could get a self-own. I’ve seen reliable reports that the incoming US administration is seriously considering repealing laws requiring employers to pay a minimum wage and/or overtime pay. I like to imagine that would bring a large number of people out in the streets demanding change. There are any number of ways an economically unequal society reaches a breaking point.

Cynics might argue that regimes ' buy’ civil order through bread and circuses. In modern parlance, we might say that the ruling class in the United States keeps people pacified with reality TV and microwave dinners. But what underlying cause can push a population to reject reality TV and microwave dinners, and out onto the streets in protest, which can lead to violence, which can lead to regime change?

Maybe we can finally put all these
 lifted pickups to good use?

Economist Debraj Ray of NYU, proposes two measures to consider: fractionalization and polarization. Fractionalization in this case means the degree to which any given society contains various groups which may be quite different and diverse. In contrast, a polarized society would have two main groups, each quite similar internally, but quite different from each other. In Ray’s studies, fractionalization, whether along ethnic or religious lines, showed no correlation with civil conflict. On the other hand, high polarization of society did show a significant correlation with civil conflict. That is to say that societies containing various groups: culture, religion, or ethnicity, aren’t predetermined to descend into violent conflict. However, those that are separated by class, and in particular a highly unequal class divide, tend to be associated with violent conflict.

 

This notion may seem contradicted by anecdotal evidence. Anyone even vaguely aware of the long, sorry history of ethnic violence, could easily name half a dozen conflicts in which the two, or more, sides claimed either a religious or ethnic, or other, motivations for collective violence against another group. The claim Ray makes is no direct link, statistically speaking, of ethnic or religious fractionalization, on the likelihood of the occurrence of civil conflict. He does not say it might not indirectly affect civil conflict.

Instead, Ray points to per-capita income as measured in GDP US dollars, as strongly significant both statistically and substantively. This doesn’t mean every poor country is always primed to go off like a powder keg after a book of lit matches gets tossed at it. If everyone is poor and close to the GDP per capita line, they are economically engaged, and largely egalitarian. Ray points out that polarization means that as income clusters are more and more in the hands of one group, it polarizes the ‘other’ group in society against them. People that fall further and further from the GDP per capita line are more marginalized and have less to lose. And as a larger population falls further and further from the GDP per capita engagement line, their fight becomes more existential and desperate. 

Ray, drawing on other’s research, takes care to point out that this shouldn’t be seen as the only factor. Another factor that matters is how dispersed economic and political power are within a system. In a system which is more dispersed, group loyalties remain localized, and demands of one group may be met or placated, without injuring the interests of other groups. A cynic might think of this as the technique of ‘divide and conquer’, but that somewhat misses the point. Whether they intended it or not, the framers of the US constitution built such a system, and in his own writings, Ray describes such a system as federalism. 

In the not-so-distant past, laws and economic arraignments could vary quite broadly from state to state. For an example, consider the impact of laws allowing commercial banking across state lines. Previous to the 1980s, banks were generally confined to a state or region. This “artificial” restriction balanced the potential increasing returns inherent in markets like lending and deposit services, and provided for smaller banks and credit unions to get a start and compete with their regional, older siblings. After the deregulation of the 1980s, banks were allowed to compete across state lines and take advantage of the increasing returns to scale; that they could decrease their average costs while increasing the quantity of services they provided. I'm sure you'll be shocked to find out that Federal Reserve research has found that bank consolidation is not the result of 'natural' market forces, nor does in improve outcomes for customers...

Pictured: the US banking regulatory system.

Ray contrasted federalism with a centrally focused system. Not only does such a system vest most political power in the hands of a central government, such societies can be quite susceptible to forming polarized groupings; those who hold and/or benefit from economic power, and the majority who do not. These polarized societies might possess fewer cleavages compared to a federalized society, but the cleavages that do exist run through the whole of society, and thus feel more important. Therefore, when conflict occurs, the central authorities will find it hard to placate one group without antagonizing the other. 

Ray also points out the phenomenon of ‘local compression’ vs ‘global compression’ as another key driver of civil conflict. In this case, the terms local and global do not refer to physical geography, so much as they refer to the distribution of income and/or wealth. Where people experience local compression in an economic system, populations cluster along specific segments of the income/wealth scale. In practical terms, this might mean a lot of poor people, few people in the middle income brackets, and a second, smaller cluster in the top brackets.

 

In the meantime, let's spin out a quick scenario for how it might happen and what the implications would be for the other countries of North America. In the interest of limiting the scope of the scenario I will assume that sometime next year, maybe the year after, widespread defaults in the commercial real estate market lead to a generalized banking crisis. The specifics of who defaults and who gets bailed out aren’t per se important, what's important is the optics of yet another financial crisis in which the rich get bailed out and we, ‘the poors,’ get to fend for ourselves. But let's say this time the anger of the American people can't be mollified by another general election.

So mobs take to the street, demanding the reversal of whatever policies are seen as causing the most pain. As police crackdowns on protests routinely backfire, and the political establishment seems more and more tone deaf to the moment this revolutionary moment, lines get drawn in peoples’ hearts and minds. Equally important would be the loss in value of the dollar as the crisis drags on. As the dollar loses its value, budget crunches hit municipal police departments; the police officers may no longer feel like it's worth it to put on riot gear and beat down their fellow citizens in defense of laws they might hate just as much as the protestors. 

I'm sure this won't end badly...

This collapse of economic viability in the United States would result in a shut down of supply chains in Mexico, as well as energy exports from Canada to the United States. This results in people in both countries also either losing their jobs, seeing their wages cut back, or seeing a collapse in their purchasing power. How this plays out would depend on internal factors. In Canada we might see a situation in which the western provinces demand control over how much tax revenue gets sent to Ottowa, rather than kept local to deal with the economic downturn. In Mexico, the loss of manufacturing income combined, with a government that is of dubious legitimacy and constantly embroiled in armed conflict with drug exporting cartels, might lead people into the streets to call for a dissolution of the country along regional lines. Or perhaps the forces of revolution would not be centrifugal in either case.

Snap elections in Canada might bring to power a coalition which seeks the creation of even more central authority, in order to weather the crisis. In Mexico, it could lead to the instillation of a strongman who follows a method of dealing with street gangs similar to the President of El Salvador. 

But we are getting ahead of ourselves. I will explore the interplay of all those forces in the full scenario; so for will call it a day. Next week, we will move on to our sixth, and most unpredictable factor: the national politics of the United States..